SEMINARIO Las relaciones económicas de China con América Latina y el Caribe: Una visión prospectiva 11 de noviembre de 2015 j Reforms in Exchange Rate System and Capital Market Liberalization In China Jiandong Ju, Shanghai University of Finance and Economics Seminar “The Economic Relations between China and Latin America and the Caribbean: A prospective Vision” The Issue • Independent Monetary Policy • Fixed exchange rate • Capital market openness • Trilemma of reforms: – Financial sector reform – Exchange rate system reform – Capital market openness • Direction of Reforms: – – – – Financial sector reform Floating exchange rate system Capital market openness Sequence? Current Reforms • Financial sector reforms – Interest rate marketization • Exchange rate reforms – 8/11 depreciation • Capital market openness – 40 items in Shanghai Free Trade Zone Current Risk Control • 2Q risk control – Qualified account • Free trade (FT account) in Shanghai FTZ – Quota Current Sequence • 1. Capital market liberalization • 2. Interest rate Liberalization • 3. Exchange rate floating Two rules • Marketization in international financial system • Control systematic risk to prevent financial crisis Our suggestion • Non-linear capital flow tax